Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Needs of marketing and customers, What are the needs of marketing and custo...

What are the needs of marketing and customers? Marketing surrounded through customer needs: Marketing starts along with the customer requirements and needs. Such are turned with

Case study , hi i have a case study in a marketing management course with ...

hi i have a case study in a marketing management course with 4 question. each answer should be in 250 words.. how can i send the file and the related materials ..thanks

Building your marketing plan, In fine-tuning the product strategy for your ...

In fine-tuning the product strategy for your marketing plan do these two things: 1.- Develop a simple three-column table in which (a)market segments of potential customers are in t

Importance of the positioning, Importance of the positioning or why positio...

Importance of the positioning or why positioning: 1.       To create a distinctive place of a product or service in the minds of potential customers. 2.       To provide a c

Marketing management., whatis test marketing?Explain the various approaches...

whatis test marketing?Explain the various approaches that are followed by FMCG companies in test marketing

Describe crm functional, (a) The Marketing analysts Jim Sterne and Matt Cu...

(a) The Marketing analysts Jim Sterne and Matt Cutler have developed a matrix that breaks the customer life into five distinct steps. Describe these five steps. (b) The CRM

Co branding, what type of co branding is Nike and Apple involved into?

what type of co branding is Nike and Apple involved into?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd